ChampionX Corporation [CHX] Conference call transcript for 2022 q4
2023-02-02 12:53:06
Fiscal: 2022 q4
Operator: Good morning. Welcome to ChampionX Corporation's Fourth Quarter and Full Year 2022 Earnings Conference Call. Your host for this morning's call is Byron Pope. I will turn the call over to Mr. Pope, you may begin.
Byron Pope: Thank you. Good morning everyone. With me today are Soma Somasundaran, President and CEO of ChampionX, and Ken Fisher, our Executive Vice President and CFO. During todayâs call, Soma will share some our companyâs highlights. Ken will then discuss our fourth quarter results and the first quarter outlook, before turning the call back to Soma for some summary thoughts. We will then open the call for Q&A. During todayâs call, we will be referring to the slides posted on our website. Let me remind all participants that some of the statements we will be making today are forward-looking. These matters involve risks and uncertainties that could cause material difference in our results from those projected in these statements. Therefore, I refer you to our latest 10-K filings and our other SEC filings for a discussion of some of the factors that could cause actual results to differ materially. Our comments today may also include non-GAAP financial measures. Additional details on reconciliations to the most directly comparable GAAP financial measures can be found in our fourth quarter press release, which is available on our website. I will now turn the call over to Soma.
Sivasankaran Somasundaram: Thank you, Byron. Good morning everyone. I would like to welcome our shareholders, employees and analysts to our fourth quarter 2022 earnings call. Thanks for joining us today. Let me start by saying that 2022 was a year of strong momentum for ChampionX as we delivered robust performance on each of our key metrics, including revenue growth, adjusted EBITDA margin expansion, free cash flow generation, and capital return to our shareholders. I am grateful to all our employees for their focus and tireless dedication for delivering value to our customers day in and day out. Before I touch on our fourth quarter performance on Slide #4, we always begin our earnings call with our corporate purpose and operating philosophy, because we are passionate about improving the lives of our customers, our employees, our shareholders, and our community. At the heart of our operating philosophy is being relentless advocates for our customers. So on Slide #5, I could not be prouder of our company for recently being selected as the very first recipient of ExxonMobilâs Global Supplier of the Year award. This annual award program recognizes suppliers that achieve a high performance standard to meet ExxonMobilâs business needs and nominees are evaluated on a variety of criteria, including on time delivery, safety, responsiveness, service quality, innovation capability, and commitment to sustainability and diversity. We are incredibly humbled by this recognition and I want to thank our teams for their continued hard work and commitment to our customers success. Now, regarding the fourth quarter, our solid results reflect the positive momentum in financial performance that our company is committed to deliver for our shareholders as this energy up-cycle unfolds this year and beyond. Ken will take you through the details of our fourth quarter financial results shortly. But let me first touch on three key business highlights, which are shown on Slide #6. First, EBITDA margin expansion. Despite experiencing a slight sequential revenue decline in the fourth quarter, which was driven by a normal seasonal slowdown in sales in our North America onshore businesses into the yearend holidays, our Q4 adjusted EBITDA margin improved by approximately 190 basis points versus the third quarter on continued pricing realization and favorable mix. We delivered on our targeted exit 2022 adjusted EBITDA margin of 18%, and we remain confident that Champion X will achieve our near-term goal of an EBITDA margin of at least 20%. Second free cash flow. On our last earnings call, we stated that we expected another strong free cash flow quarter to end the year, and we delivered. Our four quarter free cash flow of $169 million represented 94% of our adjusted EBITDA. For the full year 2022 we generated free cash flow of $329 million, which represented 54% of our adjusted EBITDA. This demonstrates the best-in-class cash flow generating capability of our capital light portfolio of businesses, and illustrates our high degree of confidence of generating 50% to 60% of free cash flow to EBITDA conversion through the cycle. Third, returning capital to shareholders. We have previously shared with our -- with you our disciplined capital allocation framework, and in the fourth quarter, we once again delivered on our commitment to return excess cash to our shareholders. In the fourth quarter, between our regular cash dividend of $15 million and $80 million of share repurchases, we returned 56% of our free cash flow to our shareholders. For the full year 2022, we returned $226 million or 69% of our free cash flow to our shareholders. We remain committed to return at least 60% of free cash flow to our shareholders through the cycle. Before I turn the call over to Ken, I want to give you some more details around our Q4 market activity as seen on Slide #7. In the fourth quarter, we experienced normal seasonality in North America with the yearend holidays and some weather related impact, particularly in Bakken and Rockies, which resulted in sequentially lower sales in North America. International activity was strong, excluding Russia and cross sales to Ecolab, our international revenues grew modestly on the back of a strong 21% growth recorded on in Q3. Growth in Middle East and Latin America were offset by decline in Russia and Asia Pacific. In Production Chemical Technologies, we recorded 4% sequential growth in Middle East. In Production Automation Technologies ESP recorded 10% sequential growth followed by 9% growth in digital offset by weather related weakness in rod lift and plunger lift. PAT or Production Automation Technologies' international revenues grew 3% sequentially. Drilling Technologies international sequential growth was 11%. It was more than offset by the temporary destocking from our North American customers as they focused on year end working capital management. We have already seen order rates rebounding in Q1, and we expect solid sequential growth in drilling technologies. We have experienced similar phenomena in drilling technologies in the past. Let me now turn the call over to Ken to discuss our fourth quarter results and our first quarter outlook.
Kenneth Fisher: Thank you, Soma. Good morning and thank you for joining us today. I will be commenting on adjusted EBITDA for sequential and year-over-year comparisons. We believe this metric best reflects the business performance of continuing operations. Our fourth quarter 2022 revenue was $986 million, up 20% year-over-year, and 3% lower than our robust third quarter revenues. Our two largest businesses, Production Chemical Technologies and Production Automation Technologies were relatively flat versus third quarter. Geographically, year-over-year, North American revenues grew 10% and International revenues were up 37% in 2022. Included in our fourth quarter revenues were $26 million of cross supply sales to Ecolab. These sales were down 24% sequentially from the third quarter. As we have previously communicated, we do not recognize EBITDA margin on these sales and the associated revenue is allocated to corporate and other in our financial statements.
Garyville: As seen on Slide 11, ChampionX consolidated adjusted EBITDA in the fourth quarter was $179 million, up 8% versus the previous quarter at an increase of 30% versus the prior year period. In the fourth quarter as expected ChampionX delivered consolidated adjusted EBITDA margin of 18.1%. This was up 188 basis points sequentially and an increase of 195 basis points over the fourth quarter of 2021. Our fourth quarter free cash flow of $169 million reflected strong cash flow from operations and continued focus on working capital management. Cash from operating activities was $195 million, and capital investment was $26 million net of proceeds from asset sales. Turning to our business segments, Production Chemical Technologies generated fourth quarter revenue of $637 million, down 1% from the third quarter and up 29% year-over-year. Segment adjusted EBITDA was $121 million, up 18% sequentially and 47% higher than the fourth quarter of 2021. Volume growth and selling price increases drove the sequential and year-over-year improvements. Segment adjusted EBITDA margin was 19%, up 304 basis points sequentially and up 239 basis points from the prior year's period. Our pricing and productivity actions during the year helped us deliver above our targeted 2022 adjusted EBITDA margin exit rate of 18% in the fourth quarter. Production and Automation Technologies fourth quarter segment revenue was $244 million, a 1% decrease sequentially. Year-over-year revenue was up 20% driven by both activity and selling price increases. Digital revenue was up 9% sequentially in the quarter and up 23% year-over-year. We continue to see increasing customer focus on implementing digital technologies to reduce emissions and drive operational improvements and cost efficiencies. We expect our future revenues to continue to benefit from this industry trend. PAT fourth quarter segment adjusted EBITDA was $51 million, down 3% sequentially and up 29% year-over-year. Segment adjusted EBITDA margin was 21%, down 30 basis points versus the third quarter and up 134 basis points from the prior year, again due to higher volumes and pricing. Drilling Technology segment revenue was $54 million in the fourth quarter, down 12% sequentially and up 7% year-over-year. We experienced the decline in order in sales in the fourth quarter as some of our customers acted to manage their working capital and free cash flow for year end. As the New Year started, we have seen orders return to more normal levels. Drilling Technologies delivered segment adjusted EBITDA of $11 million during the fourth quarter, down $6 million sequentially and down $2 million compared to the fourth quarter 2021 level. Segment margin was 20% in the quarter, a 666 basis point decline, driven by the aforementioned sales decline, higher tooling costs and product mix. We expect the drilling technology margins to improve progressively through the first half of this year to more normalized margins for the second half of 2023. Reservoir Chemical Technologies revenue for the fourth quarter was $26 million, which is a decrease of 28% sequentially and 35% down year-over-year. As discussed in our third quarter earnings call, we expected our fourth quarter revenue to decline given the exit of certain RCT product lines and the typical year end industry activity slowdown. This product line exit resulted in lower revenues, but a significant improvement in the margin profile of the business. The segment posted adjusted EBITDA of $3 million during the fourth quarter, flat compared to the third quarter, and to the corresponding prior year period. Segment margin was 13% in the quarter, a 595 basis point sequential improvement and a 666 basis point improvement versus the prior year period. This again was driven by the product line exit and related restructuring actions. Moving to our balance sheet as shown on Slide 12, we ended the fourth quarter in very strong position with record liquidity of $889 million, including available revolver capacity and cash on hand. This was an increase in liquidity of $78 million versus the prior quarter. We also continued to pay down debt with $20 million in revolver debt repaid in the fourth quarter. At December 31st, our leverage ratio was 0.6 times net debt to adjusted EBITDA. In alignment with our capital allocation framework we remained committed to the return of surplus capital to our shareholders. During the fourth quarter we returned 56% of our free cash flow to shareholders in the form of our $15 million regular quarterly dividend and $80 million of share repurchases. For the full year 2022 we returned $226 million or 69% of our free cash flow to shareholders. We remain laser focused on disciplined capital allocation, delivery of operating and free cash flow, effective working capital management, and maintaining our strong liquidity and financial position. Turning to Slide 13 and our forward outlook, we expect 2023 to be another year of solid revenue growth and improving adjusted EBITDA margin rate. Specific to the first quarter, we expect revenue including Ecolab cross sales in the range of $952 million to $982 million. At the midpoint this represents a 12% increase versus the first quarter of 2022. The first quarter sequential change in revenue is primarily driven by the traditional seasonal declines in our chemical sales, primarily internationally and please see Slide 16 in the appendix for the historic trends. In North America, we expect the rebound in our North American land business, particularly in Drilling Technologies coming off the seasonal slowdown at year end. For adjusted EBITDA, we expect a range of $164 million to $172 million. This guidance includes a $5 million impact from a one-time employee inflation assistance program, as well as increased investment in our digital and emissions platform. At the midpoint, this represents a 35% increase over the first quarter of 2022, and again at the midpoint, this represents a 300 basis points improvement year-over-year in the company adjusted EBITDA margin rate. From the seasonally low starting point of 1Q we expect our adjusted EBITDA margin to improve healthily throughout the year, targeting an exit 2023 adjusted EBITDA margin rate of 20%, up approximately 200 basis points on the 2022 exit rate. On this slide, we have also provided some additional specifics related to our forward outlook. We continue to expect annual capital investment to remain in the range of 3% to 3.5% of revenues during 2023. While in periods of revenue growth, we will see the need for working capital investment we remain confident in our 50% to 60% free cash flow to adjusted EBITDA conversion ratio guidance through the cycle. We expect strong free cash flow delivery again in 2023 with a free cash flow to adjusted EBITDA conversion ratio of at least 50%. As a reminder, our free cash flow is generally weighted to the back half of the year. Thank you, and now back to Soma.
Sivasankaran Somasundaram: Thank you, Ken. Before we open the call to questions, I would like to update you on few key items. First on revenue synergies. We are now more than two years into our merger, and the cultural alignment is even stronger today than it was on day one. Our pipeline of production oriented joint sell opportunities have continued to expand, both in North America and internationally. As a reminder, our teams delivered $30 million of new customer wins in 2021, $24 million in North America and $6 million internationally driven by our revenue synergy efforts. In 2022, we generated $45 million of new customer wins, representing a 50% increase year-over-year with $37 million of these wins in North America and $8 million internationally. In addition, the total pipeline of identified potential opportunities has grown 47% at the end of 2022 compared to prior year, setting up continued momentum in our revenue synergy realization in the coming years. I want to acknowledge our global sales team as they have worked collaboratively and thoughtfully in executing these revenue synergies. We are encouraged by customer receptivity to our production solutions approach, and we expect our revenue synergy opportunities will continue to grow this year and beyond. Next on digital and emissions, we will continue to invest actively in talent and capabilities in this area in 2023. We experienced 36% growth in our digital revenues, including emissions in 2022. We expect another solid year of growth in 2023. Finally, we continue to see favorable demand tailwinds in our businesses that support a constructive multi-year outlook for our sector. We remain focused on delivering solid earnings growth, margin expansion, and strong cash generation. We are committed to creating value for our shareholders through our disciplined capital allocation framework with clear priorities of our capital, including high return investments and returning cash to shareholders. ChampionX is well positioned to help our customers maximize their value of their producing assets sustainably and efficiently. With that, let me thank all of our 7,300 ChampionX employees around the world for their tireless dedication to our purpose of improving the lives of our customers, our employees, our shareholders, and our communities. You inspire me daily. Lastly, we look forward to seeing many of you at our first Investor Day as ChampionX on March 7th in New York City. With that, I would like to open the call for questions.
Operator: Thank you. Your first question comes from David Anderson of Barclays. Please go ahead.
David Anderson: Hi, good morning, Soma.
Sivasankaran Somasundaram: Good morning, Dave.
David Anderson: I was wondering maybe we could start on the offshore markets and how you see that impacting your PCT business this year and what's in the guidance? I believe it's around 40% of your segment and we're seeing this resurgence across the offshore markets. So, I guess the question is, when does that kind of turn into increased chemical demand and start to hit the top line?
Sivasankaran Somasundaram: Yes Dave, we are excited about the offshore market and particularly our positioning in in the market and we saw the benefit of the offshore market growth as we moved into the second half of the year. You made a call. We had well over 25% international growth in the third quarter in in our PCT business. And yes, a big part of that was driven by the offshore markets. And if we look at that Q4, we saw we relatively stayed flat at that higher level, and so we expect in 2023 that offshore market to be, continue to be a positive tailwind for us.
David Anderson: Okay. And then maybe if I could shift over to the your PAT business, could you maybe breakout the North America market, how you think the ESP business versus the rod lift is going to play out this year? I think you said, if I heard you right on sequentially, the ESP are up 9, I think 10%, but rod lift and the rest were down sequentially. How does that kind of play out? I mean, we're starting to see the recounts maybe starting to peak here, so can you talk about how you see those two businesses moving?
Sivasankaran Somasundaram: Yes, so the Q4 phenomenon, what we saw in rod lift, so ESP grew 10% sequentially, digital grew 9% sequentially. The rod lift and plunger lift weakness is primarily driven by two factors. One is the seasonal slowdown. As you know, rod lift is driven by daily serve activity and so we normally see a seasonal slowdown in the fourth quarter with rod lift and then the other factor which impacted was the weather and particularly in Bakken and Rockies area. So those two items impacted the Q4. Now as we move into Q1, you will see sequential improvement in all of the artificial lift product line, including rod lift and plunger lift. So when I look at 2023, I think given the very constructive market environment, we expect ESP to continue to grow, and then we expect rod lift and plunger lift to also grow. And particularly with the rod lift, production spending continues to stay strong and the conversion things continue to come through, so we saw a nice growth in 2022 in rod lift, and we expect to see a nice growth in 2023.
David Anderson: Okay, great. Thank you very much Soma.
Sivasankaran Somasundaram: Sure.
Operator: Thank you. The next question comes from Alec Scheibelhoffer of Stifel. Please go ahead.
Alec Scheibelhoffer: Hi, thank you and good morning everyone. Thanks for taking my question.
Sivasankaran Somasundaram: Sure, Alec.
Alec Scheibelhoffer: So yes, so just to kick us off here, so I was wondering if you could provide any updates or additional color on your methane detection business, and I guess just how we should think about growth and income statement impact in 2023 and 2024?
Sivasankaran Somasundaram: Yes, as you know Alec, that this is a business which is in its infancy and with regulatory changes and our customer's commitment to continue to reduce particularly methane emissions. So we play primarily today in the methane emissions area. And if you look at today, this business is growing nicely and we got into the space in July of 2021. And if you look at from that point onwards to now, we have today well over 1600 sites, where our continuous monitoring equipment is installed and working. So customer adoption in this continues to improve, so we expect 2023 to be another year of solid growth. And that's why in the prepared comments, we talked about the continued investments in this area because we believe this market will continue to grow for many years to come. As there are different types of emission detection technology, the aerial technology, the drone-based technology, the satellite based technology, and then the ground-based continuous monitoring technology. And we offer all of the technologies except the satellite. But we believe the biggest growth opportunity will come in -- is more in the continuous monitoring ground-based monitoring technology, because as you can imagine, the rest of the technologies are very episodic. Whereas if you are -- if you want to continuously monitor and quantify technologies, you have to make sure that you install continuous monitoring technologies. So we are investing nicely in this, and we will continue to invest in people, talent, organizational capabilities. So I expect 2023 to see a nice growth in this from everything we can see, today we have the leading position in the upstream oil and gas markets when it comes to continuous monitoring.
Alec Scheibelhoffer: Great. That's excellent color. I appreciate it. And just one more, if I could squeeze one in. Just, I was wondering if you could have any additional comments on some of the raw material costs for your PCT business and just how we should think about that in 2023 and if, pricing is caught up to a level where you feel comfortable with margins going forward?
Sivasankaran Somasundaram: Yes, as you know Alec that, we have talked about this before, that raw material prices, particularly in 2022, has been really difficult to predict, right? And so the forecast and those have been in 2022 has been somewhat difficult to predict. But what we saw in fourth quarter, we did see some favorability in our raw material. And so going forward, what we have is, we do believe that raw material prices at a minimum stabilized and possibly well may show, our current view is possibly may show some relief. So what we have built into our guidance and our forecast here is the raw material favorability what we saw in Q4, we have built into our forecast and guidance. And I think that we believe is a very reasonable assumption because we have seen stabilization in the raw material prices and so we have built that into our forecast, so that's what I would say.
Alec Scheibelhoffer: Excellent. Thanks again, and thanks again for taking my question.
Sivasankaran Somasundaram: Sure, Alec.
Operator: Thank you. The next question comes from Saurabh Pant of Bank of America. Please go ahead.
Saurabh Pant: Hi, good morning, Soma and Ken. Just sticking to Production Chemicals first. Soma, I think on the last quarterly call we were talking about the top line in PCT growing at multiples of all volume growth, right? And you walked through all the reasons why it would be multiples of all volume growth, right? But just looking back at 2022, I think you grew PCT top line 7.5 to 8 times all volume growth, and we know there's a lot of pricing dynamic going on both gross and net, right? So how should we think about, how much of a multiple we should see in the PCT top line in 2023?
Sivasankaran Somasundaram: Yes, Saurabh, I think this is one of those things we will detail out more in the upcoming investor day. So, but we do expect 2023 to be another year of solid growth, right? Because we believe, production spending, production volume will also increase. So we do expect it to be a solid growth. And we talked about in the call, how much was pricing, how much was actual volume growth. So I don't expect our pricing to grow like it did in 2022. So if you look at it, it should be another good multiple of growth. We are not necessarily saying what it is. Can it be a low double-digit growth? It possibly can be going forward, but again, this is a short cycle business. Right? It's really hard to predict what happens in Q3 or Q4, but we do believe it will be a solid growth year going forward. And one thing I want to remind Saurabh is, as you know, Russia is still part of this business. Right? So that will be depending on what happens with Russia in the year, that will be a, that can impact the top line.
Saurabh Pant: Yes. Okay. Perfect. Soma I got one on Drilling Technologies, but before that, just a quick follow up on Production Chemicals. It seems like with your 20% exit rate margin guidance, first thing is it fair to resume 20% for PCT as well? Because I know that was your intermediate term target. Is it fair to resume 20% for PCT by folks you, and then just on that 20% number, right, how should we think about that 20% margin being a peak margin, being a mid-cycle or normalized margin? How should we think about that? We don't have enough history on the Production Chemicals front, so just give us a little context on how should we think about that number for peak versus normalized?
Sivasankaran Somasundaram: Yes, I mean, I think the, if you -- again, if you go back in the history of Production Chemicals and the historical numbers, obviously when they are part of Ecolab it's, the cost structure at Ecolab and, being part of a bigger company, I think I'm not quite sure that's fully representative. It's a guidance, but I don't, I'm not sure it's fully representative of the margin potential of this portfolio. Right? Especially of our Production Chemical business. So going forward, right to answer your first question on Q4, no we do expect PCT to exit at that target rate of 20% in Q4, and we do feel there is more opportunities for us to build on it, right? Our teams have done really great job in working through the pricing, working through the productivity. We are laser focused on driving productivity and network optimization, operational excellence. So I do believe that there is more opportunities to go beyond 20, but right now we are focused on making sure that we exit at the 20% margin rate in Q4.
Saurabh Pant: Okay, Soma perfect. No, that's a good answer. A quick follow-up on the Drilling Technologies side of things, I know you said in your prepared remarks, you are seeing a solid recovery in January and customers are coming back and ordering more cutters. Just so that I appreciate the magnitude of the recovery, how should we think about, do you get back to third quarter revenue run rate in the first quarter, in the second quarter? And then just related to that on the margin front, I know absorption does move the margins pretty quickly in this business, right? How should we think about margins going forward in Drilling Technologies? And I know the mix has been shifting between cutters and bearings, right? So keeping all that in mind, how quickly should we expect a recovery in the top line and how should we think about margin trajectory through 2023?
Sivasankaran Somasundaram: Yes. So Saurabh, on the top line, again I wanted to, first what we saw was that temporary destocking, and we have seen this before, we have seen this before. What I mean by that is even in a constructive environment, sometimes you find in Q4 particularly in Drilling Technologies, you will see this type of an impact sometimes because customers are focused on some yearend working capital management items. So I would rather back in the deck, as you know, we have that chart where we show the destocking, restocking. In that chart I think it's on page 17, if I remember and if you look at the couple of quarters if you want to have a reference point, you go back and look at Q4 2011 and Q4 2013, and then look at the rebound in Q1 of 2012 and Q1 of 2014, the subsequent quarters, you will see the similar phenomena. And what we are experiencing is that similar phenomena, even in a constructive market environment, you see this type of phenomena. So we are not concerned about that because we have seen in January, so what you would see is a solid sequential growth, and we are seeing that. Now coming to margins, so as Ken mentioned in the prepared remarks, so we are experiencing some higher tooling costs. So if you look at our Q4 margins, the reason the margin is down to 20% is because one is the volume, but the other issue is we are experiencing higher tooling costs in particularly in our high pressure new products. So our teams are working on it. So we are very focused on delivering the products. So that's happening, but we are experiencing higher tooling cost. So the teams are working on it, and we have already seen in January that we are starting to see some improvement in it, but it's going to take us couple of quarters to get to the normalized margin. So going forward, when you put this together along with the mix issue of bearings, and I think what you should do is what you should see in the second half of 2023 is we are returning back to that 30% level of margin, and then we can grow from there. So that's what I would say.
Saurabh Pant: Okay, perfect. No, Soma, that's perfect. Thank you. I'll turn it back.
Sivasankaran Somasundaram: Thank you, Saurabh.
Operator: Thank you. The next question comes from Atidrip Modak of Goldman Sachs. Please go ahead.
Atidrip Modak: Hi Soma, good morning. I just wanted to touch on guidance for 1Q. What are the drivers of the low and high end of the revenue and EBITDA guidance? How should we think about the moving parts? Is it just a function of the degree of seasonality or are there other elements across the segments that we can think about?
Sivasankaran Somasundaram: Yes, it's a primarily a function of seasonality, so and that's primarily in our Chemical Technologies business. So say it the other way that you will see the seasonal, seasonality and seasonal Q4 to Q1, our PAT business starting to grow, as our North American land business starting to get back and you will see our Drilling Technologies, as we already talked about. Right? So it's primarily a Chemical Technologies business and primarily an International phenomena. And that's why we provided the historical perspective in the chart going back several years. So this is something we normally see. So in terms of high -- guidance range, so what can make it better? Obviously the activity level in Q1 is better than we anticipate, and it can be better. Right? And that's what I would say. So I think it's just a seasonal aspect, so -- and we are seeing the trend in January in our PAT and Drilling Technologies and all that rebounding from the seasonal slowdown in Q4. So as we get into Q2, you will see our Production Chemical business continues to pick up its growth.
Atidrip Modak: Okay. Thanks for the color there. And then you mentioned one area of focus for the Investor Day, but can you help understand what your primary areas of focus will be across the business? What should we be looking for in March?
Sivasankaran Somasundaram: Yes, so Ati, I'm glad you asked. We are excited about the upcoming, the March Investor Day, right? And you know, this is our first Investor Day since we had the transformational merger in 2020. So this is our first Investor Day as ChampionX. So, what we want to accomplish in this Investor Day is first and foremost, we want to make sure that we provide a deeper understanding of our portfolio, particularly our Chemical Technologies business, because I think the Chemical Technologies business is new in our portfolio since 2020, and it's our largest business today. So we really want to provide a deeper understanding of our Chemical Technologies business, including why is the Production Chemicals, why is it attractive? What are the key drivers of growth? What are the key drivers of cost? And make sure that we provide a good understanding of our portfolio, particularly our Chemical Technologies business. Second is we want to show our positioning of the business portfolio of ChampionX. And why is it attractive in the emerging world of oil and gas? So we really want to show the attractiveness of the portfolio for the future in oil and gas. Third is, we want to detail out our high impact organic growth opportunities, because we have talked about some of this before, the intensity of Production Chemistry is increasing, the requirement of artificial lift. One of the emerging discussions is about well productivity, and particularly in places like Permian. We want to talk about how does our portfolio, particularly Production Chemicals and artificial lift, how does that help customers deal with these well productivity issues? Because those are all, I would say attractive factors for our Production Chemistry and artificial lift businesses. So we really want to detail out those high impact growth. The other aspect I would mention is, in Production Chemicals, we sometimes talk a lot about the production volume growth and particularly oil volume growth. But we will also demonstrate it is not just dependent on oil volume growth; it's also dependent on total fluids produced, because as these wells start producing more water, there is more chemistry required as well to treat those water. Right? So we really want to detail out the high impact organic growth opportunities, and then we want to highlight and show a view of the new development of technologies, new emerging technologies, particularly in emissions and digital as well as the new technologies we are focused on in our artificial lift and Production Chemicals, which helps customers produce efficiently and reduce their carbon footprint. Right? So that's kind of what I would say that in a -- what the crux of our Investor Day would be.
Atidrip Modak: Okay. That's awesome color, thank you so much and really looking forward to it. I will turn it over.
Sivasankaran Somasundaram: Thanks, Ati.
Operator: Thank you. There are no further questions at this time. I'll turn the call back to Mr. Pope for closing remarks.
Byron Pope: So thank you everyone again for your continued interest in ChampionX, and we look forward to seeing you on our March 7th Investor Day in New York. Thank you and have a great day.
Operator: Ladies and gentlemen, this does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.
